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17 March 2016

REWE Group has its best operating result in the history of the company

revenue growth of 3.7 per cent* to 52.4 billion euros and increase in EBITA of 12 per cent to 587 million euros

REWE Combine increases revenue by 4.1 per cent* to 43.7 billion euros +++ Operating result EBITA from continuing operations increases by 12 per cent to 587 million euros +++ Independent REWE retailers: EBITA grows to 250 million euros +++ Investments totalling 1.3 billion euros +++ REWE supermarkets at the top of the German food retail sector with increase in revenue of 5.5 per cent +++ International Full-Range Stores grow by 2.8 per cent* +++ National Discount Stores grow by 2.8 per cent and achieves turnaround +++ International Discount Stores: revenue growth of 4.2 per cent* +++ toom Baumarkt DIY stores grow by 1.9 per cent +++ Travel and Tourism increases revenue by 10.4 per cent following Kuoni integration +++

* revenue growth figures adjusted for currency effects

REWE Group is continuing to benefit from its large investments in innovation and modernising its markets: In the 2015 business year, the Cologne-based trade and tourism company achieved its best operating result in the history of the company. Thanks to very strong progress in the fourth quarter of 2015, revenue from continuing operations, adjusted for currency effects, rose by 3.7 per cent to 52.4 billion euros. "We have significantly exceeded our plans for the past business year," said Alain Caparros, CEO of REWE Group, at the presentation of the as yet uncertified figures in Cologne on 5 April 2016.
"Firstly, we have benefited from the consumer behaviour of consumers in Germany, especially in the last three months of 2015. Secondly, our enormous investments in the continuous modernisation of our food retail operations is paying off.
Overall, our strategic course, in which we have consistently focused simultaneously on consolidation and innovative business models in recent years, is proving to be a strong foundation of our profitable growth. The revenue of our supermarkets has once again grown considerably stronger than the industry as a whole. Particularly gratifying is the turnaround we achieved with PENNY in Germany in 2015. Our combined Discount Stores business in Germany and abroad has contributed a high two-digit million sum to the excellent operating result of our company," said Caparros. "We also see good opportunities for maintaining a positive trajectory for PENNY's results in Germany in the future. However, that's not an absolute priority for us. If we identify a need for greater investments to keep PENNY on a sustainable development path, we are ready to do so."

In Germany, REWE Group revenue rose in the past business year by 2.6 per cent to 38.2 billion euros. Abroad, REWE Group revenue, adjusted for currency effects, grew by 6.8 per cent to 14.2 billion euros.

The main growth driver was National Full-Range Stores with REWE's supermarket business in Germany. In this business segment, the company generated revenue growth of 4.4 per cent. The economic development of medium-sized REWE retailers was particularly outstanding. “Following revenue growth of 7.9 per cent in 2014, we were able to achieve an increase in revenue of 10.6 per cent in 2015," said Caparros.

REWE Group: Approximately 3,900 new employees in Germany

The number of employees in Germany and 11 other European countries rose by 2.5 per cent to 326,478 (continuing operations). In Germany alone, the number of employees increased by 1.7 per cent from 228,124 to 232,027 in 2015.

The Cologne-based trade and tourism group increased the number of trainees in Germany by 1.3 per cent from 7,901 (30.09.2014) to 8,000 (30.09.2015). During the course of the year, 3,486 entry-level employees started their career at REWE Group. National Full-Range Stores, with 5,769 trainees, is the largest trainer within the company group, followed by PENNY with 943, toom Baumarkt DIY stores with 678, and DER Touristik with 426 trainees.

Revenue produced by the REWE Combine from continuing operations (excluding independent retail, shareholdings and at-equity entities) grew by 4.1 per cent to 43.7 billion euros, adjusted for currency effects. The operating result EBITA from continuing operations totalled 587 million euros – an increase of 12 per cent compared to the previous year's figure of 524 million euros. On a comparable basis, i.e. taking into account extraordinary effects on earnings in previous years and adjusted for the current expenses for REWE Digital, this is the best operating result in the history of REWE Combine.

Adjusted for non-cash provisions for onerous contracts and asset impairments, EBITA from continuing operations increased by 17 per cent from 516 million euros in 2014 to 602 million euros in the past business year.

The annual profit for 2015 is estimated to have increased by around 22 per cent compared to the previous year to 383 million euros.

"The turnaround at PENNY in Germany has contributed significantly to the excellent development of our EBITA," explained Caparros.

Operating result generated by REWE Combine of 587 million euros does not include EBITA produced by independent REWE retailers; this figure rose once again compared with the previous year from 212 million euros to around 250 million euros – also a new record level.

REWE Combine's earnings before interest, taxes, depreciation and amortisation (EBITDA) climbed by 9.5 per cent to 1.48 billion euros compared with the previous year's total of 1.35 billion euros.

The cash flow from operating activities before working capital effects was 1.49 billion euros and therefore exceeded the previous year's figure by 13.2 per cent.

Investments made in 2015 totalled 1.3 billion euros, the same high level as the previous year. At the same time, net financial debt without a finance lease reduced by 33 million euros to 397 million euros.

Equity reached a new record high of 5.3 billion euros in 2015. This represents an equity ratio of 31.3 per cent.

"Our outstanding balance sheet figures provide the foundation for investment, both now and in the future, in organic growth, comprehensive modernisation of our sales structures, and innovative business models. For 2016, we are planning to make investments totalling more than 1.6 billion euros," said Caparros. "Recent years have shown how difficult it is to grow through acquisitions, particularly in Germany. Therefore, our future profitable growth must be focussed on organic expansion and continuous strengthening of area performance, on the one hand. On the other hand, we must be prepared for the future of digitisation and omnichannel business, both in the food retail sector and in the travel and tourism sector. This is why we are investing in new business models and sales channels. We feel this is the best way of equipping us for the challenges ahead. For example, when it comes to our food shopping delivery service, we clearly have a first-mover advantage. And we are working flat out to secure and extend this competitive edge. The systematic combination of stationary and online business that we're able to provide in the REWE Group compared with purely online competitors is beneficial for our customers and a big opportunity for our future economic development," said Caparros.

National Full-Range Stores business segment

National Full-Range Stores with REWE, REWE Center, REWE City, REWE To Go and TEMMA, as well as Nahkauf and other wholesale partners, generated a revenue increase of 4.4 per cent to 17.7 billion euros in 2015. The external revenue of REWE supermarkets (branches and partners) increased by 5.5 per cent compared with the previous year.

This strong performance was mainly due to qualitative development and intensive work on the product range in the area of fruit and vegetables; the positive development of store brand product ranges; the continuous expansion of product ranges in innovative areas such as convenience, regional and local products, organic and vegan, and last but not least, investments in training employees.

The development of PAYBACK continues to be very successful. In 2015, there were a total of 12.5 million PAYBACK customers in REWE stores – 2.5 million more than the previous year.

The REWE delivery service is currently available in 75 cities – including Berlin, Hamburg, Frankfurt, Munich, Cologne and Düsseldorf – and the surrounding area. In terms of figures, the existing delivery structure already currently allows us to reach approximately 30 million German citizens.

In 2015, National Full-Range Stores had a share of around 40 per cent of the total revenue of REWE Combine and is therefore the largest business segment in the company.

International Full-Range Stores business segment

International Full-Range Stores combine activities in Austria, the Czech Republic, Slovakia, Russia, Bulgaria, Croatia and the Ukraine. In December last year, the REWE Combine separated from the BILLA supermarket business in Romania. The total of 86 BILLA supermarkets were sold to Carrefour.

The revenue of International Full-Range Stores from continuing operations increased by 2.8 per cent to 8.4 billion euros, adjusted for currency effects.

In Austria, revenue from BILLA, BIPA, MERKUR and ADEG increased by 1.6 per cent to around 6 billion euros; BILLA and MERKUR in Austria contributed to this figure with a growth of 1.9 per cent. With a market share of more than 34.4 per cent, the REWE Combine remains number one in the Austrian food retail sector.

Revenue in the six markets of Central and Eastern Europe increased by 5.8 per cent, adjusted for currency effects, in 2015.

National Discount Stores business segment

PENNY in Germany increased its revenue in the fiercely competitive discount business by 2.8 per cent to around 7 billion euros. This placed PENNY considerably above the revenue development of an increase of 0.3 per cent calculated by GfK for the German discount market. The number of stores fell in the past business year by 34 to 2,134. Area performance in German PENNY stores grew in 2015 by 3 per cent. Due to the excellent revenue development, it was possible to achieve a turnaround in the National Discount Stores business segment in 2015, ahead of schedule.

International Discount Stores business segment

In the 2015 business year, PENNY International generated revenue of 4.1 billion euros in the five countries of Italy, Austria, Hungary, the Czech Republic and Romania, thus achieving growth of 4.2 per cent, adjusted for currency effects. REWE Group withdrew completely from the discount business in Bulgaria in the 2015 business year. Part of the business, including the warehouse, was sold to BILLA Bulgaria to strengthen the full-range business.

With revenue of 1.1 billion euros, the Czech Republic remains PENNY's strongest revenue-producing international market. PENNY International achieved its biggest jump in revenue in the past business year in Romania with growth of 13.8 per cent, adjusted for currency effects, followed by Hungary with an increase of 5.7 per cent.

National Specialist Stores business segment

The National Specialist Stores business segment of REWE Group encompasses the DIY store activities of toom Baumarkt and B1 Discount Baumarkt. In 2015, revenue in this business segment rose by 1.1 per cent compared with the previous year's total and reached 2.1 billion euros. The 269 toom Baumarkt DIY stores alone achieved revenue growth of 1.9 per cent.

Travel and Tourism business segment

Travel and Tourism is the second core business of REWE Group. Overall, DER Touristik revenue – taking into account the acquisition of Kuoni on a pro rata basis – grew by 10.4 per cent to 5.4 billion euros.

The takeover of Kuoni included the tour operator specialists as well as the travel agencies and online sales operations in Switzerland and Great Britain, in the Scandinavian countries Sweden, Norway and Denmark, as well as in Finland, Belgium and the Netherlands.

Outlook: Dynamic revenue growth in Germany and abroad

The successful economic development of REWE Group has continued into the first two months of 2016. REWE's supermarket business in Germany increased cumulatively in January and February by 4.6 per cent compared with the previous year. PENNY increased its revenue by 2.7 per cent in Germany. The discount business abroad achieved revenue growth of 5.8 per cent. The National Specialist Stores business segment, including the DIY stores of toom Baumarkt and B1, grew by 1 per cent. International Full-Range Stores achieved revenue growth of 2.4 per cent. The Austrian full-range stores contributed to this figure with revenue grow of 2 per cent. At DER Touristik, the takeover of Kuoni resulted in nominal revenue growth of 60 per cent.

Revenue growth remained dynamic in March thanks, amongst other things, to good business over the Easter period. This enabled REWE supermarkets to increase their cumulative revenues after three months by 5.5 per cent. In the first quarter, PENNY in Germany increased its cumulative revenue by 3.5 per cent.